By Leslie Scism
MetLife Inc. said it would resume share repurchases, intending
to buy up to $1 billion, its latest effort to return capital to
shareholders while it awaits word on whether it will be named a
nonbank systemically important financial institution.
The nation's largest life insurer by assets has been
conservatively managing its growing pile of capital while it is
under review for possible designation as systemically important by
the Financial Stability Oversight Council, an entity created by the
Dodd-Frank financial-crisis overhaul.
The company will use existing board approval to buy back the
shares. The last time the insurer repurchased shares was 2008, the
year the financial crisis began.
MetLife's current market capitalization is nearly $62
billion.
In a statement Tuesday, MetLife Chairman, President and Chief
Executive Steven A. Kandarian said the company was proceeding to
buy back shares because it has continued to amass capital, while
the time frame for the Federal Reserve to settle on capital rules
and other requirements continues to be pushed farther out.
"We anticipated that the nonbank SIFI capital rules would be
known by now, but recent statements by the Federal Reserve suggest
that we may not see draft rules until 2015," Mr. Kandarian said in
the statement. "Meanwhile, our capital continues to grow."
In addition, MetLife this year will add another $1 billion of
equity to its balance sheet as securities issued to fund the 2010
purchase of an international life-insurance unit from American
International Group Inc. convert to common shares.
In April, MetLife increased its quarterly dividend by 27%, just
its second boost since the financial crisis.
MetLife's share-buyback move comes just days after the U.S.
Senate passed a rare change to the 2010 Dodd-Frank law, modifying
the financial overhaul to allow the Fed more flexibility in its
regulation of the insurance industry.
The move was a win for MetLife, Prudential Financial Inc., AIG,
and other life insurers facing, or potentially facing, Fed
oversight. In the House, a companion bill has more than 50 sponsors
with a roughly equal mix in both parties.
Last week, AIG said its board approved the repurchase of up to
an additional $2 billion in common stock.
AIG's board acted after the company completed the sale of its
International Lease Finance Corp. aircraft-leasing unit. For the
first time since the financial crisis, AIG reinstated its quarterly
common-stock dividend in August 2013, as the insurance conglomerate
posted second-quarter results showing strong earnings gains.
In February 2014, AIG's board approved a 25% increase in the
quarterly dividend. The board also approved a $1 billion
stock-repurchase authorization on top of the $400 million that
remains from a $1 billion buyback program last year.
In a February regulatory filing, Prudential said that since
commencing share repurchases in July 2011, through the end of last
year, it had acquired shares at a total cost of $2.4 billion.
Prudential has raised its dividend several times since the
financial crisis.
MetLife has told investors on several occasions that it wants to
use some of its excess capital for potential acquisitions, citing
as an example its 2013 purchase of Chilean pension provider AFP
Provida SA in 2013 for about $2 billion.
While MetLife hasn't been designated systemically important,
analysts expect this to occur, particularly since its longtime
rival Prudential Financial received the designation last year.
Prudential was ahead of MetLife in the review process, because of
delays tied to MetLife's prior ownership of a bank that was
regulated by the Fed.
Prior to shedding its bank-holding-company status in early 2013,
MetLife was prevented by the Fed from increasing its dividend and
buying back shares, despite the insistence of company executives
that the company had billions in excess cash available to return to
shareholders. After selling the bank to a unit of General Electric
Co., MetLife entered the systemically-important review process.
Write to Leslie Scism at leslie.scism@wsj.com